Gambling Winnings for 2018

[ldawn513]

Thank you. I was hoping maybe PA updated its allowance on expenses such as travel since it was just recently allowed by the IRS. But it appears that PA hasn’t made any updates since the link that you posted in your reply. I still don’t really see where PA disallows session gambling as a way to report wins. If, for example, someone is playing online and puts $100 in, loses $90, then hits for $1200 then plays off all of their points except for the $100 and cashed out, they technically broke even. This was one session and they really didn’t win anything. Sad thing is they will get a w2g for the $1200. Using the session gambling strategy they don’t have to report that $1200 win on their federal taxes and and would need to include form 8275. I was hoping that PA would also accept this session gambling way to report the wins.

[RowdyTuckah]

Hello,

Thank you all for your contributions helping casual gamblers like me navigate the “session gambling” method and hopefully save some money in taxes!

I have some questions I am hoping someone here can answer, and hopefully others looking to file taxes using this method can benefit too:

-Using this reporting method, it sounds like we forego entering W2Gs and instead enter the total of all session wins, and are allowed to offset that with total session losses (itemized up to the session win amount at maximum), if applicable. What happens to taxes already withheld on W2Gs from the past year? Are these applied anywhere on the session method return? It seems like with this method it may make more sense going forward to have no taxes withheld (in case you lose all of the winnings in that session). Could someone answer how this factors in?

-Specifically in TurboTax, how would one complete this session gambling entry? Is it possible? It seems like TurboTax isn’t set up for this method of accounting for gambling entries, but is there a “hack” or workaround that might allow one to enter or override this? If I do not put in w2g information, where would I complete these session entries? I’ve seen some recommend 1099-MISC with session win as one entry and losses in another entry (listing it as negative). Others have said use schedule 1 for winnings and schedule A for itemized losses. What has worked for others and how is this entered into TurboTax?

-Will the return need to be submitted via mail or can it be electronically filed? If so, is there a way to complete the notification form 8275 to disclose session method calculation? If filed electronically, will the return be rejected because the w2g doesn’t line up with IRS totals? If so is there a workaround to this?

Thank you in advance for all your help!

[RaifH]

You can still report the taxes withheld, even if you do not report the W-2Gs themselves. You can report them in the Federal > Deductions & Credits > Other Income Taxes Paid in 2021 > Withhlding not already entered on a W-2 or 1099. 

I am not as well-versed on this topic as previous posters in this thread, but you would enter your sessions in TurboTax using the gambling winnings section in Federal > Wages & Income > Less Common Income > Gambling Winnings. You would enter that you didn't receive a W-2G and just enter the winning sessions on the next screen. For example: 

• Session 1 you won 1,500 and lost 6,000
• Session 2 you got a W-2G for 50,000 and lost 45,000
• Session 3 you won 1,800 and lost 600

Using the regular method of reporting, you would report your W-2G and other winnings for a total of 53,300. You would then report losses of 51,600 which would be an itemized deduction.

If you opt for the sessions method, you would just report gambling winnings of 6,200 (5,000 for session 2 and 1,200 for session 3). 

Form 8275 is not supported by TurboTax and neither is the sessions method of reporting. You would have to paper file to include Form 8275. This Form is basically used to tell the IRS, "Look, I know I'm doing something weird, even if you don't agree with it, at least take a look and don't add any penalties." If you do opt to paper file and include Form 8275, no TurboTax accuracy guarantees would be enforced. 

I can't speak to what the IRS will do after that. It will certainly raise red flags if you received a W-2G and opt to report it this way and your entire gambling winnings do not add up to what is on the W-2G. What happens next is probably based on prior rulings, how much money is at stake, and if any regulations specifically addressing session gambling have been enacted. What I can say is that if you are opting to report this way, have a very good log of your gambling records and be able to defend what you have chosen to define as a gambling session. 

@RowdyTuckah

[RowdyTuckah]

@RaifH 

What an incredibly helpful and timely post - thank you for this info! This forum is one of the top searched “session gambling” listings on Google so between you and the others who contributed here you’re helping a lot of folks navigate this. Cheers!!

[an0925]

Hi! Not sure if you're still active here, but have you had actual experience with this and not being audited?

[ldawn513]

Sorry for such a late response to this question. I had to mail my return in because of the form regarding the session gambling. I also send in an excel worksheet schedule showing my win loss sessions. If I received a w2 g for any winnings, in my schedule I list these and bold print them in a bright color so it stands out. I haven’t had any issues doing it this way. When entering the info in turbo tax I just enter the amount of the net session wins in the “other gambling winnings “  and days where I had session losses I use those if I itemize that year. I enter those amounts in the gambling losses section of tax program. 

[ldawn513]

Hi. I have done this method for a few years and have not had any issues. I try to be as detailed as possible when sending in my excel workbook schedule as backup that shows my wins and losses. I think this has helped. I make sure to list out the w2g hits on my schedule so that the irs can match the amounts up. I can’t do this electronically so I have to mail in my return. 

[cmelcher52384]

Hi there, sorry to beat this very dead horse! Last two posters - you mentioned providing the excel file. Are you literally printing it out, or are they asking for it electronically after the fact?

[bb135]

exactly, i have an excel from DraftKings which is 18 MB and has around 150K records , how to print this entire excel and send to IRS while paper filing.

[bb135]

please let us know how do you send the excel file to IRS , do you print the entire excel worksheet? I ahve excel file form draftkings with 150k records quite impossible to print out entire excel and send. Please advise how did you do?

[DawnC]

Don't include attachments with your tax return.   It will prevent you from being able to e-file and it will slow down the processing of your return.   Keep detailed records in case of an inquiry.   If you do receive an inquiry, you can use the IRS Document Upload Tool to submit the file.  

The IRS Document Upload Tool is a secure, easy and fast way to send information to the IRS. You can use the tool to:

• Upload scans, photos, or digital copies of documents as JPGs, PNGs or PDFs
• Get confirmation that we received your documents

@bb135 

[bb135]

Thanks , but i was referring to paper filing option mentioned by Idawn513 just few posts above , he mentioned he sent excel worksheet to IRS with complete session details , so was wondering how can we print out a huge excel file with 150K records and send to IRS while doing paper filing.

[Vanessa A]

To print out a huge excel file you may need to print in landscape mode and use fit to page depending on how your file is set up.  Then after you print the file, add it to your tax return, place it in a large envelop and mail it to the address on the instructions that print with your return. If it is too large for an envelope, you may need to put it in a box and send it using IRS approved Private Delivery Service. 

As stated above, it is better to just send a summary, as the IRS is not likely to go through every page of your excel file.  You can simply enter the sum totals or breakdowns of your winnings, losses and expenses or if you prefer to send through mail, you can have a summary page instead of all the details.  

[nightrider007]

To bb135

This thread / discussion is about a special circumstance for filing gambling "Session" reporting (this is a special circumstance where events occur in 24 hour periods) - a SPECIAL circumstance that very few people will ever do.  In reading your posts I am thinking you are just trying to file regular sports gambling from your win / loss statement you got from Draft Kings & others.

If you are just trying to file your win loss statement (s) then you are reading the wrong discussion / thread and should be able to e-file without mailing the printed win / loss statement(s).

Again, unless you know what this special circumstance(s) are in this discussion / thread then you need to look for just regular gambling reporting from win / loss statements.

[cmelcher52384]

I appreciate the attempt to clarification. One of the recommendations in all of these threads is to paper file and include a letter referring to the Supreme Court case.

would it not make more sense to e-file and either send the IRS a note in their secure contact portal, referring to the case and include a log, or more to your point just wait until they send an email to you requesting something?